GENERATE FIXED RETURNS WITH A 100 PERCENT GEARED AND PRINCIPAL PROTECTED INVESTMENT
The Macquarie Flexi 100 Trust is a managed investment scheme that allows you to borrow 100 percent of the amount you want to invest, with exposure to a range of Australian and international assets and full protection of your principal investment. You can choose from a range of market exposures and investment terms, with a fixed regular income to help you plan for interest repayments.
If your situation changes or the market fluctuates, you can walk away from your investment on certain dates approximately each quarter, without incurring any additional costs. This investment option is ideal for individuals, companies, trusts and Self Managed Super Funds (SMSF) and is the only product of its kind that has an Australian Tax Office (ATO) product ruling, which offers certainty around interest deductibility. Zero margin calls, a capped interest rate and the ability to pre-pay interest before 30 June means you know exactly what your costs are for the entire term and can manage your wealth in a tax-efficient way.
HOW IT WORKS
You borrow 100 percent of the investment amount (minimum $25,000 per investor) at a fixed rate and prepay any interest on the loan annually. The investment loan is limited recourse, which means if you default on your loan, the lender only has the right to claim assets and distributions from the fund, but no other assets held in your name or SMSF. You will need a separate investment loan for each class of assets in your investment (minimum $5,000 per class). Your principal investment loan amount stays 100 percent protected for the term of the loan and there are no margin calls.
Regular income from your fund can help you meet the cost of interest payments (depending on your class of units), or you can choose a full recourse interest loan as an alternative. Interest loans are not available to SMSF investors. The full recourse loan will need to be repaid and is secured by assets outside the Flexi 100 fund, which can be claimed by the lender if you don’t meet your loan obligations.
At maturity, the fund will provide you with the proceeds from the sale of your units, which will be used to repay your investment loan. Any additional income and distributions above this amount are considered profits for yourself or your company, trust or SMSF.
BENEFITS OF MACQUARIE FLEXI 100
The Flexi 100 is a unique investment opportunity with a range of benefits.
You can:
- Borrow 100% of the investment amount at a fixed rate with no margin calls Access a range of markets, fixed distributions and investment terms throughout the year Gain exposure to a range of assets including Australian equity investments, international equity investments and managed funds Add a Macquarie Flexi 100 investment to your Self Managed Super Fund (SMSF)
- Avoid loan establishment fees and pay management fees out of the funds’ assets Benefit from the Australian Tax Office (ATO) ruling that allows you to deduct interest payments associated with your investment
- Exit your investment early with no additional costs, via the ‘Walk-Away’ feature.
This allows you to withdraw from your investment on certain dates approximately each quarter, without paying anything else on your investment loan, provided you have prepaid the annual interest on your loan out of your own funds. However, if you have an interest loan you will have to repay the loan and all other outstanding costs Receive a fixed, regular income throughout the term of your investment.
RISKS OF MACQUARIE FLEXI 100
Like any investment, there are risks associated with the Macquarie Flexi 100 trust:
- You may not be approved for the compulsory limited recourse investment loan, which funds 100 percent of your investment
- The fund may perform poorly, due to economic downturn or volatility in the market, which means you may not receive a return on your investment
- At maturity, the total value of your returns may be less than what you’ve paid in interest and other costs, resulting in an overall loss
You should consider taxation and your time as other costs which may influence the overall returns you receive on your investment
There is a risk that the parties involved, including Macquarie Bank Limited, do not meet their obligations. This means you may not receive any return on your investment and will need to pay the principal and interest on your interest loan (if applicable) together with any additional costs out of your own funds Your investment may be terminated early and you will need to repay the investment loan and interest loan. In this case, your units will be redeemed, you will not be entitled to any further distributions or receive a refund of any prepaid interest.
Circumstances where this may occur include a change in law, a material change in the cost of hedging or ability for Macquarie Bank Limited to hedge its exposure, and other factors You may be exposed to foreign exchange fluctuation, which can affect the value of your investment
The ATO may change their position and deny tax deductions for some or all of the interest expenses associated with your investment If you take up the ‘Zero Breakeven’ feature, a small change in the value of your fund can significantly impact your returns. You may not receive any positive return on your investment or receive a regular income on your investment, which means the interest payments on your investment loan will need to be paid from your own funds and you will make an overall loss Your exposure to assets in the fund may be capped, which means a limit may be placed on your investment returns.
Before investing in the Macquarie Flexi 100 Trust and taking out a loan, you should carefully consider the risks outlined in the risks section of the Product Disclosure Statement (PDS) and talk to your SF Wealth financial adviser.
This information is general in nature and does not take into consideration your personal circumstances. Talk to your SF Wealth financial adviser for advice that’s right for you.
